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Regional laggard once again?

A record economic slump last year coupled by a sluggish recovery moving forward may have made the Philippines the “sick man of Asia” once again.

Instead of people lining up for the grand opening of giant retail stores like the boom seen two years ago, long queues are now snaking around community pantries organized to support the struggling residents weighed down by the various nationwide lockdowns.

If there’s one thing that the unseen coronavirus has exposed, it is the structural defect that a decade-long outsourcing boom and remittances from migrant workers have glossed over. Together, they helped raise incomes and lifted at least two million Filipinos out of poverty at the turn of the century.

It was good while it lasted.

After that, the consumption-led economy took a complete tailspin, its momentum weighed down by high unemployment and underemployment as Covid-19 reared its ugly head.

The situation, according to analysts, worsened with the mass return of migrant workers who faced loose quarantine requirements and unreliable Covid-19 testing, even as more contagious variants of the virus took hold. The Philippines has recorded more than 1.1 million Covid-19 cases, the second-most in Southeast Asia.

The country is expected to suffer the highest unemployment rate this year among major Asian economies, according to a Bloomberg survey.

The pandemic likewise exposed a decentralized health care system and rampant inequality that took its toll on the country’s once juggernaut business environment.

Amid all these contributing factors, consumer sentiment has been described as “deep in the red,” giving rise to speculations that the economy will not easily return to pre-pandemic levels until possibly the end of next year.

In contrast, neighboring countries such as China, Taiwan and Vietnam have already returned to previous output levels, while South Korea, Indonesia and Thailand are expected to move on this year.

This should make the country once again the clear laggard in the region, according to observers.

Despite implementing one of the world’s longest lockdowns that included a mass transport shutdown and ban on children and the elderly outside of their homes, authorities only managed to quell the outbreak for a few months before a fresh surge in cases forced renewed restrictions last March.

With such a scenario, Philippine economy nosedived in the first quarter and is now seen to be among the slowest in Asia to recover.

Even by 2025, output will remain 11.5 percent below what it would have been if pre-pandemic trends had continued, according to Fitch Solutions Inc. Life in lockdown, it said, has worsened the already stark inequality.

While relatively affluent Filipinos worked at home, ordering in groceries, prescriptions and wine, the unemployed grasped at odd jobs as delivery riders or online sellers, with many yet to rejoin the labor force.

The country is expected to suffer the highest unemployment rate this year among major Asian economies, according to a Bloomberg survey.

Even as restrictions have been loosened, Filipinos, according to Google Data have been the least mobile in Southeast Asia, an ominous trend for household consumption, which makes up more than 70 percent of the economy.

The government is likewise gradually rolling out digital contract tracing and pinning its hopes on the vaccines, with deliveries expected to reach 21.8 million doses this quarter.

With lessons learned at the height of the lockdown last year, the government is now opting for more targeted restrictions than the blunt lockdown that closed 75 percent of the economy last year. Mass transport is operating in a limited capacity, and work in most sectors continues.

Despite an improved Covid-19 management, observers believe the Philippines has not made it out of the woods yet. But it’s slowly learning its lessons.

Economic Planning Secretary Karl Kendrick Chua has a better way of putting it: “Instead of avoiding the risk, we are now managing the risk.”

Let’s keep our fingers crossed.

Credit belongs to : www.tribune.net.ph


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